Placement with KA First expected to raise $100 million in two tranches
By Devika Patel
Knoxville, Tenn., Sept. 10 - K-Sea Transportation Partners LP said it settled an $85 million tranche of a $100 million private placement of preferred units. The deal, which is being conducted with KA First Reserve, LLC, priced Sept. 2.
The company said its remaining tranche of $15 million will settle following clearance of Hart-Scott-Rodino review and that it amended its revolving credit facility and other debt and lease agreements upon closing this tranche.
The company is selling approximately 18.4 million convertible preferred units at $5.43 apiece to KA First. It sold 15.7 million units in the initial tranche.
The price per unit reflects a 10% premium to the five-day volume-weighted average price of K-Sea's common units on Aug. 26. The 13.5% preferred units are each convertible into one unit. The company may force conversion after three years.
In connection with the investment, KA First will appoint three directors to the board of K-Sea's general partner and will be granted the right to acquire a 35% interest in the entity that owns the company's incentive distribution rights. The partnership's board will be expanded from six members to nine members; KA First's designees to join the board are Gary Reaves of First Reserve and Kevin McCarthy and Jim Baker of Kayne Anderson.
Proceeds will be used to reduce debt.
"We are very pleased with our new association with First Reserve," president and chief executive officer Timothy J. Casey stated at pricing. "Their decision to invest in us is a testimony to K-Sea's leading industry position and the strength of our company."
"With our balance sheet recapitalization behind us, we will be able to focus on operations, results and new opportunities. We remain convinced the domestic market for marine transportation of refined petroleum products will rebound significantly when demand recovers and single hull vessels leave the market permanently."
Based in New York, K-Sea provides marine transportation, services and logistics for petroleum products.
| Issuer: | K-Sea Transportation Partners LP
|
| Issue: | Convertible preferred units
|
| Amount: | $100 million
|
| Units: | 18.4 million (approximate)
|
| Price: | $5.43
|
| Coupon: | 13.5%
|
| Conversion ratio: | 1 for 1
|
| Call: | May force conversion after three years
|
| Warrants: | No
|
| Investor: | KA First Reserve, LLC
|
| Pricing date: | Sept. 2
|
| Settlement date: | Sept. 10 (for $85 million)
|
| Stock symbol: | NYSE: KSP
|
| Stock price: | $4.15 at close Sept. 1
|
| Market capitalization: | $85.01 million
|
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